sales were $600,000 for the year just ended, and its total assets was $408,300. The company was started by Mr. Jarmon just 10 years ago and has been profitable every year since its inception. The chief financial officer for the firm, Brent Vehlim, has decided to seek a line of credit totaling $80,000 from the firm's bank. In the past, the company has relied on its suppliers to finance a large part of its needs for inventory. However, in recent months tight money conditions have led the firm's suppliers to offer sizable cash discounts to speed up payments for purchases. Mr. Vehlim wants to use the line of credit to replace a large portion of the firm's payables during the summer, which is the firm's peak seasonal sales period. The firm's two most recent balance sheets were presented to the bank in support of its loan request. In addition. the firm's income statement for the year just ended was provided. These statements are found in the popup window: Mike Ameen, associate credit analyst for the Merchants National Bank of Midland, Michigan, was assigned the task of analyzing Jamon's loan request. T.P. Jarmon Companv. Income Statement for the Year Ended 12131/2018 T.P. Jarmon Comnanv Income Statoment for the Voar Fnitad 1212113019 a. Calculate the financial ratios for 2018 corresponding to the industry norms provided in the popup window: The current ratio is X (Round to two decimal places.) The acid-test ratio is X. (Round to two decimal places) The times interest earned ratio is X. (Round to two decimal places.) The average collection period is days. (Round to two decimal places.) The inventory turnover is X. (Round to two decimal places.) The return on common equity is %. (Round to one decimal place.) The operating return on assets is \%. (Round to one decimal place) The operating profit margin is %. (Round to one decimal place) Data table (Click on the following icon in order to copy its contents into a spreadsheet) The return on common equity is K. (Round to one decimal place) The operating refurn on assets is \%. (Round to one decimal place) The operating profit margin is %. (Round to one decimal place) The total asset tumover is x. (Round to two decimal places)) The fixed asset turnover is X (Round to two decimal places) b. Which of the ratios reported in the industry norms do you feel should be most crucial in determining whether the bank should extend the line of credit? (Select all the choices that apply) A. Liquidity ratios such as current faso and acid-test raso B. Profitabity ratios such as return on equity and operating profit margin C. Market value ratios such as peice to earnings ratio and price to book value ratio D. Asset management ratios such as total asset tumover and fxed asset lumover E. Debt management ratios such as debt ratio and times interest earned ratio c. Prepare Jarmon's statement of cash flow for the year ended December 31,2018. Complote the operating activities part of the statement of cash flows below. (Round to the nearest dollar. NoTE You may input expense accounts as negative values) Statement of Cash Flows (Cont'd) Cash Flows from Investing Activities Change in gross plant and oquipment Net cash provided (consumed) by investing activities Complete the financing activities part of the statement of cash flows below. (Round to the nearest doll NOTE You may input expense accounts as negative values) Statement of Cash Flows (Cont'd) Cash Flows from Financing Activities Change in notes payable Change in debt Dividends Net cash provided by financing activities Net change in cash 5 5 d. Use the information provided by the financial ratios and the cash flow statement to decide if you would support making the loan. (Select the best choice below) A. No. This firm is running a deficit and the ratio analysis indicates that a potential default on the current liabiries may occur B. Yes. This firm is profitable and with the pudicious use of loan covenants may become a valued client to the bank. C. No. This firm is not profitable and with the huge amount of debt may not be a valued client to the bank. D. Yes. Athough the firm is not profitable, its low leverage and high liquidity will make it a valued client to the bank